AutoBeta(AutoBeta.net)04/25 Report--

On the evening of April 24, Evergrande disclosed in an announcement that the Tianjin factory had suspended production of Hengchi 5 due to lack of funds. Before that, Evergrande suspended other factories and concentrated its resources on production in Tianjin. The suspension of production at the Tianjin plant means that production of Hengchi's first model, the Hengchi 5, will be suspended for some time, but Evergrande said it expects to resume production in May 2023.

Evergrande had a foreboding before it was shut down. On March 22, Evergrande issued an announcement that Evergrande 5 was continuing mass production and 900 vehicles had been delivered as of March 23. Evergrande Group will face the risk of shutting down production without access to new liquidity. Evergrande said in an announcement on the same day that in order to concentrate financial resources to support Hengchi 5 production, the company continued to promote cost-saving measures, including optimizing the staff structure. In addition, according to the original plan, 5 billion-7 billion yuan will be needed from 2023 to 2026 to support its plans to launch a number of flagship models. Evergrande pointed out that Evergrande New Energy vehicles will face the risk of stopping production without access to new liquidity.

Combined with the analysis of the announcement disclosed yesterday night, it means that Evergrande's financing plan is not going well. But last night, both China Evergrande and Evergrande both announced that they would get out of the predicament in a different way-China Evergrande plans to buy Evergrande Automobile-related projects and acquire about $24.8 billion in debt to help Evergrande get out of trouble.

China Evergrande and Evergrande Motor announced in separate announcements that China Evergrande plans to acquire 47 residential and property development projects owned by Evergrande for 2 yuan. Upon completion, Evergrande will no longer have any interest in the selling group. At the same time, China Evergrande will undertake these projects with a debt of about 24.789 billion yuan as the transaction price. According to the announcement, the 47 projects sold by Evergrande include 21 Evergrande Health Valley projects, 5 Evergrande Health City projects and 21 property development projects, which are located in Xi'an, Zhengzhou, Chongqing, Wuhan and other cities. Evergrande said in the announcement that it will continue to operate the existing main business of the new energy vehicle division after the deal is completed, and hold a residential and property development project in Tianjin and Nanning each. In addition, Evergrande also said that since it only had to pay a nominal consideration of 2 yuan for the sale, the company did not expect to receive any net proceeds from the sale.

In other words, there will be almost no gain from this insider trading. In response, China Evergrande said: "taking into account the recent orientation of investors towards companies listed on the Stock Exchange that are mainly engaged in the new energy vehicle segment, the board of directors believes that Evergrande's valuation can be improved by concentrating Evergrande's business in the new energy vehicle division, which may help attract investors to join Evergrande and raise funds." At the same time, China Evergrande believes that the restructuring will optimize the structure of Evergrande Automobile Group so that it can focus on the development of new energy vehicle divisions and invest in the R & D and production of new energy vehicles derived from the new energy vehicle division. In addition, Evergrande pointed out that it is actively seeking potential external investors to obtain possible cooperation opportunities. At the date of the announcement, no final agreement has been signed with any potential investors.

In addition to reducing debt and attracting potential investors, China Evergrande also said in the announcement: "as part of its overall overseas debt restructuring plan, it is now expected that the company's financial creditors will be able to obtain bonds that can exchange shares in Evergrande on certain terms. As a result, these creditors will also benefit from the value growth of Evergrande Automotive Group. " According to the overseas debt restructuring announcement issued by China Evergrande, in the corresponding debt repayment terms, there are debt repayment plans linked to Evergrande property and Evergrande Automobile shares for investors to choose.

According to public data, Evergrande, formerly known as Evergrande Health, was initially mainly responsible for running Evergrande's health business in China. In 2019, Evergrande announced its entry into the field of new energy vehicles, and later renamed Evergrande Health to Evergrande Automobile, which is a wholly owned subsidiary of Evergrande China.

Up to now, Evergrande Automobile Product Matrix has a total of 9 models: Hengchi 1, Hengchi 2, Hengchi 3, Hengchi 4, Hengchi 5, Hengchi 6, Hengchi 7, Hengchi 8 and Hengchi 9, including cars, SUV and MPV, covering all levels A to D, but so far only one model has achieved mass production, and only 900 new cars are facing the crisis of stopping production.

Evergrande Automobile Annual report data show that Evergrande Automobile lost 1.429 billion yuan, 4.426 billion yuan and 7.394 billion yuan respectively from 2018 to 2020, that is to say, Evergrande has accumulated 13.249 billion yuan over the past three years.

Although Evergrande's first model, Hengchi 5, has been put into mass production, it is far from being able to pull Evergrande, which is mired in financial crisis, out of the quagmire. According to the latest financial report, as of December 31, 2021, Evergrande had total assets of 59.521 billion yuan and total liabilities of 58.83 billion yuan, with an asset-liability ratio of 98.84%, which is almost insolvent.

Obviously, the financial crisis has become an unavoidable problem in the process of Evergrande's car building. judging from the current situation of Evergrande, Evergrande wants to continue to operate normally and mass produce more new cars, which means that Evergrande still needs a lot of "blood transfusion." at present, Evergrande is facing many cases of information about the executees. Under the fierce market competition, no one knows how high Evergrande can set off in the future. As for whether the Evergrande car crisis can be improved after this internal restructuring, the answer will soon emerge.

New car traffic insurance data show that Hengchi 5 has delivered a total of 975 vehicles since its official delivery on October 29, 2022, of which 519 were delivered in 2022 and 456 in the first two months of 2023.

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